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Restructured Beechcraft leaner, more efficient

About the time Beechcraft Corp. entered Chapter 11 bankruptcy protection more than a year ago, an EF-3 tornado barreled through Wichita ripping the roof off part of the company’s Plant IV production facility.

“We said, you know what, we’re in bankruptcy. We just had a tornado hit us. What else could go wrong?” said Bill Brown, executive vice president of global operations for Beechcraft.

The bankruptcy filing led to the end of jet production, and that, along with the tornado damage, led to a total revamping of the factory in east Wichita and redesign of the assembly line.

“We decided, ‘Let’s make lemonade out of this,’” Brown said. “We realized we would get only once chance in our life to do this. This is a great opportunity to do it right.”

Beechcraft wanted to construct a more efficient production line as it concentrated on production of its turboprop and piston airplanes – the King Air, Baron and Bonanza.

It was part of the company’s reorganization plan, to stop jet production and reshape itself into a smaller company. (It’s also concentrating on its after-market and military businesses.)

The company gathered its crew chiefs, gave them a factory blueprint and said, “What do you want it to look like?” he said. “This is a chance to do anything you want. Cost is an issue, but it isn’t a concern.”

“Typically during bankruptcy you don’t spend any money; you don’t do anything,” Brown said.

But the company wanted to be able to produce at a high rate once it emerged from the restructuring.

“We knew people were going to want our products. ... We made the right decision,” Brown said.

During the first six months of 2013, Beechcraft delivered 95 King Airs, Bonanzas and Barons, compared to 45 in the first half of 2012.

And earlier this month, it announced the largest order for propeller aircraft in the history of civilian general aviation.

Wheels Up, a newly formed private aviation membership firm, ordered 105 King Air 350i aircraft, including 35 firm orders with options for 70 more. Deliveries are to begin this year.

Although the market is still difficult, the order demonstrates that Beechcraft is competitive and doing well in the world marketplace, said Beechcraft CEO Bill Boisture.

The restructuring during bankruptcy continued operational improvements that had begun in recent years and that included modifications to both its manufacturing operations and supply chain operations, Boisture said.

“We came out of that financial restructuring with a restructuring in progress in operations that’s very significant,” Boisture said. “What it sets up is a very predictable, repeatable assembly and delivery process.”

There are goals for further improvements.

Normally, companies going through bankruptcy experience a good bit of operational disruption, he said. But Beechcraft is delivering aircraft on schedule, on time and below planned costs, Boisture said.

“I’m very proud of our people,” he said.

Going through the bankruptcy wasn’t easy.

“There were some difficult decisions made,” he said. Besides eliminating jet production, it reduced staff and its footprint.

Previously, it had closed sites in Salina and Little Rock, Ark., and moved work from Plant II to Plant IV. It put Plant II on the market.

Now after years of financial uncertainty and a down economy that has hurt the general aviation industry, the company is stabilizing itself. During the bankruptcy, it shed more than $2billion of debt.

“It’s smaller, but we’re healthy,” Brown said.

The company is able to invest in its piston, turboprop and military aircraft.

“Beechcraft needs to be focused on Beechcraft,” Boisture said.

The company has a number of bidders – from groups both locally and internationally – for the assets it has offered to sale: Hawker 4000 and Premier corporate jet business, the Plant III composites factory and the paint and completions plant in Little Rock.

Bidders are now undergoing their due diligence process.

“Everybody here believed that the bankruptcy was just an obstacle to get us better,” Brown said. “We went through it, but nobody quit. It was amazing.”

While the factory was in flux, there was a risk production would have to be halted, Brown said. That didn’t occur.

“Cash was so critical during bankruptcy, we had to keep production going,” he said.

A visual factory

Along Plant IV’s revamped assembly line, a light near a mechanic’s work station turns from green to yellow – or red – when there’s a problem with a part or another issue threatens to slow production.

The system sends messages to key people so a problem can be addressed immediately. If the red light stays lit more than an hour, more messages go out to additional people.

It’s part of a notification system called an “Andon” board that interfaces with employees on the line and gives detailed information on a plane’s progress.

At the same time, rolling racks of parts and supplies, such as panels, tail cones and doors, travel from station to station as a plane moves down the line. Across the aisle, trays hold smaller pieces and parts.

Each piece has its place so mechanics can immediately tell whether they have everything needed to do their jobs.

Beechcraft also hired a firm to fix multiple problems with its SAP software system.

“It was a mess,” Brown said of the system. There was no configuration control. Data was confusing.

Now, engineering drawings, part numbers and other data have been fixed, and the system is working well, he said.

“It knows what I need by part number,” he said.

Floors and ceilings were painted, aisles widened and the flow reconfigured. The King Air line moved to the center of the factory.

The plant is now so brightly lit and pristine that “if the floor gets dirty, they will rip you,” Brown said of the employees in the plant.

There are no trip or strain hazards.

Employees also went through safety training, including safety at home and work. An improvement in safety is one of the most important results of the revamping, Brown said.

Most companies strive to have about two injuries per 100,000 hours worked, he said. At Beechcraft, it’s now less than 1 per 100,000 hours.

Plant I was also cleaned up and equipment renovated.

Campus-wide operational improvements cost about $3million and took three months, Brown said.

“It was money well spent,” he said. “I would say we got that back in spades just in employee morale.”

Employees are proud of their work, Brown said. An April open house planned for 2,000 employees and families drew 4,000.

Eliminating jets

It took only one weekend to move the remaining jets inside the factory into storage, Brown said.

They will be stored until the company sells the Premier and Hawker 4000 type certificates. They are part of the sale.

The company will continue to support the Hawker 400 XP and Hawker 900. Those parts will remain in storage until they’re needed by owners, Brown said.

It was difficult to see the jets in the factory after production stopped, Brown said.

“What we found was when you came in every day and you saw the 4000 line sitting there, it gave you hope,” Brown said. “And we didn’t want to create hope for that. It wasn’t going to happen.

“There was a lot of pride in every one of those airplanes – a lot of blood, sweat and tears in all of us, everybody in this company,” Brown said. “It was emotionally difficult. I still believe the 4000 is one of the finest airplanes ever made.”

You also have to face reality, he said. The debt burden was too much.

The biggest challenge was a shift in priorities, Brown said.

The company was investing so much into jets, investment in the King Air was miniscule by comparison, he said. Now, it can invest significantly in the airplane.

Existing King Airs will get new avionics and a new interior.

Plus, “we’re looking at some other things that I’m not going to tell you about that are pretty cool,” Brown said. “Then you look at the next generation King Air and what does that look like down the road?”

That’s being lined out, he said.

Factory improvements have made a difference in efficiency. The amount of scrap, repair and rework has improved by 20 percent.

More than that, “we came out of bankruptcy on schedule, on time and on rate,” Brown said. “Our new owners couldn’t figure out how we did it,” he said.

“Everybody told us it couldn’t be done,” Brown said. For one, the supply base would be out of sync.

During the bankruptcy, some suppliers reduced the lines of credit or shipped parts on a cash-in-advance basis.

The company was able to restore their confidence.

“We brought them in and showed them what we were doing,” Brown said. “We were very transparent during bankruptcy. The supply base reacted to that honesty and integrity.”

Now, the company is on back-to-normal trade terms.

Today, Beechcraft is preparing to boost piston and turboprop production rates next year.

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